Best banker

A.P. Gian­nini was one of the great­est bankers in his­tory, a su­perb busi­ness leader whose name to­day is largely un­known. With bankers be­ing in ill re­pute since the cri­sis of 2008–09—the lat­est black eye, of course, comes from Wells Fargo—it is per­haps salu­tary and in­deed in­spir­ing to look at a banker who did so many things right. Born in north­ern Cal­i­for­nia in 1870, this son of Ital­ian im­mi­grants (at age 7, he wit­nessed his fa­ther’s mur­der over a money dis­pute) went into the pro­duce busi­ness as a bro­ker and was so suc­cess­ful that he re­tired at 31. Soon af­ter, Gian­nini took a seat on the board of a lo­cal bank and couldn’t un­der­stand why it—and every other bank—re­fused to serve the rapidly grow­ing pop­u­la­tion of im­mi­grants. Bank­ing ser­vices, he was re­peat­edly told, were for only the well-to-do. He left the bank and started his own, the Bank of Italy, which years later mor­phed into the Bank of Amer­ica. Gian­nini made it the largest bank in the U.S. His life of­fers many les­sons for would-be en­trepreneurs. • Gian­nini broke all the rules. His bank stayed open long hours to ac­com­mo­date shift work­ers. As well as English, tell­ers spoke their cus­tomers’ im­mi­grant lan­guages. They in­structed cus­tomers in the ways of bank­ing, from fill­ing out de­posit slips to man­ag­ing check­ing ac­counts. Loans were made for as lit­tle as $25—ridicu­lously small lev­els in the eyes of tra­di­tional bankers—with low in­ter­est rates that were light-years away from those of the loan sharks im­mi­grants had to go to be­fore. De­faults were few. Hav­ing spent much of his early life on San Fran­cisco’s wharves, Gian­nini had learned how to size men up. He ad­ver­tised, some­thing banks never did. He and his col­leagues knocked on count­less doors to get de­pos­i­tors.

Gian­nini also opened new branches re­lent­lessly and bought up smaller banks. He pi­o­neered the bank hold­ing com­pany and ex­panded into other states. (Decades later Wash­ing­ton forced Bofa to spin off its non-cal­i­for­nia banks and its in­sur­ance op­er­a­tions.)

It was not only in serv­ing im­mi­grants and pi­o­neer­ing con­sumer fi­nance (new and used cars, mort­gages and home ap­pli­ances) that Gian­nini did the un­con­ven­tional. He ap­plied the same ap­proach to whole in­dus­tries, such as fi­nanc­ing the new film in­dus­try sprout­ing up in Hol­ly­wood (in­clud­ing Columbia and MGM stu­dios) and Cal­i­for­nia’s winer­ies.

In 1937, when Walt Dis­ney was on the brink of fi­nan­cial ruin be­cause of vast over­runs in pro­duc­ing what was re­garded as a piece of mad­ness, the fea­ture-length car­toon Snow White and the Seven Dwarfs, Gian­nini made a big, life­sav­ing loan, against the ad­vice of all his col­leagues.

In 1932 in the pit of the Great De­pres­sion, when the bank was un­der se­vere fi­nan­cial pres­sure, Gian­nini had the bank buy all of the bonds that en­abled the con­struc­tion of the Golden Gate Bridge.

Gian­nini fi­nanced Wil­liam Hewlett and David Packard when their com­pany was still housed in a garage.

Af­ter WWII Gian­nini had Bofa ag­gres­sively lend to war-torn Europe and Ja­pan. He fi­nanced the re­build­ing of Fiat’s ru­ined fac­to­ries, for in­stance. • Cri­sis man­age­ment. In 1906 San Fran­cisco was hit with an earth­quake and sub­se­quent fires that left the city in smol­der­ing ru­ins. Af­ter the quake but be­fore the fires swept the city, Gian­nini got a wagon, loaded it with the bank’s cash and gold, cov­ered the load with pro­duce and drove it out of the city. He re­al­ized that the com­ing fires would melt the bank vaults, trap­ping the money therein. As the fires abated, Gian­nini re­turned to the city, threw a plank across two bar­rels, put the money on his makeshift ta­ble and sent out the word that any mer­chant who wanted a loan to be­gin re­con­struc­tion could come by and get it im­me­di­ately.

It’s no sur­prise that Gian­nini aroused in­tense com­pet­i­tive jeal­ousies. When Franklin Roo­sevelt shut down all the banks in 1933—the fa­mous Bank Hol­i­day—to de­ter­mine which banks were sound and would be al­lowed to re­open and which would be per­ma­nently closed, the tra­di­tional banks lob­bied the Trea­sury Depart­ment to close down Bofa. Gian­nini had to use every po­lit­i­cal chit he had and all his pow­ers of per­sua­sion to save his bank. By con­ven­tional mea­sures many of his loans were trou­bled, but Gian­nini be­lieved he knew the ul­ti­mate sound­ness of his bor­row­ers bet­ter than any Wash­ing­ton bu­reau­crat. • Char­ac­ter. Gian­nini in­spired in­tense trust be­cause he clearly was a man with a good mis­sion, ca­pa­bly serv­ing ig­nored cus­tomers. • Wealth isn’t an end in it­self. Gian­nini died in 1949 with a lower net real worth than when he sold his pro­duce busi­ness nearly a half-cen­tury be­fore. He be­lieved “no man ac­tu­ally owns a for­tune; it owns him.” He con­stantly gave money away to fund schol­ar­ships and med­i­cal re­search. He never paid him­self more than $50,000 a year, very good money in his time but a pit­tance by to­day’s big-com­pany CEO stan­dards. Dur­ing the De­pres­sion he took no salary.

Sadly, the bank­ing in­dus­try is so reg­u­lated now that any­one with Gian­nini’s ex­tra­or­di­nary en­tre­pre­neur­ial tal­ents would prob­a­bly be­come frus­trated to the point of leav­ing.